Bipartisan Measure Introduced to Require State Representation on Federal Banking Board

U.S. Sens. Tom Coburn (R-OK) and Mazie Hirono (D-HI) have jointly introduced bipartisan legislation that would ensure proper state regulatory representation on the Board of the Federal Deposit Insurance Corporation (FDIC). The State Regulatory Representation Clarification Act (S. 2852) clarifies existing language in the Federal Deposit Insurance Act that the FDIC Board must include an individual who has worked as a state official responsible for bank supervision. Currently, none of the individuals who serve on the Board meet this requirement. “The legislative history states that Congress sought to ensure that the FDIC Board include a member with state bank regulatory expertise and sensitivity to the issues confronting the dual banking system,” said CSBS President and CEO John W. Ryan. “Expertise and sensitivity to issues confronting the dual banking system comes only from serving as a state official responsible for supervising state-chartered banks.” “Hawaii families and businesses face unique circumstances and rely on local banks and credit unions that understand those circumstances to help them buy new homes or get a loan to start a new business,” said Sen. Hirono. "In fact, seven of the 12 banks in Hawaii are state chartered, accounting for 84 percent of the small business loans made in the state. It is important that people who understand the  perspective of community banks and how they serve different communities are represented on the FDIC board.” “Washington does not always know best, and it is important that Congress reaffirms and clarifies its intent that the FDIC will benefit from the view of those with firsthand experience regulating the banking industry at the state level,” said Sen. Coburn. “Our financial regulatory framework needs multiple perspectives, and the state bank regulatory perspective is a critical ingredient in that mix.”